hard · Market Microstructure
Under Reg NMS Rule 611 (Order Protection Rule), what is a broker required to do if the best offer is $50.01 on Exchange A, but they receive a buy order to execute at $50.05 on Exchange B?
- Execute at $50.05 on Exchange B if Exchange B offers higher PFOF.
- Internalize the order at $50.03 to provide price improvement over the $50.05 request.
- Route the order to Exchange A to avoid a 'trade-through' of the protected quote.
- Execute at Exchange B and pay a 'fine' of the $0.04 difference to Exchange A.
Sign up free to see the explanation and track your rank →
More Market Microstructure practice
- A stock is quoted at $50.00 bid x $50.10 ask. A buyer submit… — How does this action affec
- A stock is trading at $100.00. The Level 1 S&P 500 Market-Wi… — What is the status of trad
- If the stock price drops instantly from $50.05 to $49.00 in a 'flash crash,' what happens
- Under the National Market System (Reg NMS), if Exchange A is quoting a stock at $10.00 x
- If the stock gaps down and opens at $69.50 on Tuesday morning, at what price will the trad
- If the dealer uses a quote shading parameter of κ = 0.00004 to manage inventory, what is t
- A trader places a large sell order for 50,000 shares at $50.01 only to cancel it immediate
- Using the Lee-Ready algorithm, how should a trade occurring at $50.10 following a $50.00 t